A great table and explanation of the difference uses and value of the two forms of measurement for social marketeers, from Angie Schottmuller in Search Engine Watch:
|Cost-Based Analysis (CBA)||Return on Investment (ROI)|
|Formula||Benefits – Costs||( Benefits – Costs ) / Costs|
|Example||$12,000 B – $1,000 C
= $11,000 CBA$61,000 B – $50,000 C
= $11,000 CBA
|($12,000 B – $1,000 C) / $1,000 C
= 11 or 1100% ROI($61,000 B- $50,000 C) / $50,000 C
= 0.22 or 22% ROI
|Format||Dollar Value||Percentage or Ratio|
|Purpose||Analyze estimated cost impact. e.g. make a profit, break-even, take a loss.||Analyze investment effectiveness for generating a profit.|
|Common Use||Compare options using a common currency and justify bottom-line feasibility of spending.||Assess profitability as a basis for continuing and prioritizing future investments.|
|Answers…||Will we come out ahead?||How effective were we at coming out ahead? What kind of payback did we get for the investment?|
Note: An ROI of 1 or 100% implies you’d get back what you put into it, while CBA, also sometimes known as Cost-Benefit Analysis, has a $0 “break even” point.
Notice how in the examples above, the CBA for two different tactics with very different costs could be the same, while respective ROI sheds further light on the investment effectiveness.
Anyhow that’s not all from Angie, in the post there’s also a very helpful section on different calculation formulas which comes with the following presentation including said formulas for social SEO among others: